CoE Budget Speech 2019

MMC-for-Finance-Cllr-Doctor-Xhakaza

Member of the Mayoral Committee for Finance and Economic Development, Cllr Doctor Xhakaza, has on Thursday, 23 May, delivered the City's budget speech at Germiston Council Chamber. The speech, which is anchored on the City's pro-poor agenda, fiscal prudence and additional revenue sources, highlights containment of tariff increases, consolidation of social packages and investment in capital infrastructure for economic stimulation.

The budget was delivered on the back of achievement of 94% revenue collection rate from the annual billing. Collection rate for revenue services - The rate of revenue collection is at 94% of annual billings.

Among other achievements is unqualified audit, with a reduction in the number of factors of concern to the Auditor-General. Some of the key highlights include:

  • Zero unauthorised expenditure, and zero fruitless and wasteful expenditure;
  • 42 percent reduction in irregular expenditure; and
  • Clean audit on performance information.

MMC for Finance Cllr Xhakaza presented an annual budget of R48.9 billion for 2019/20 financial year, with an operating expenditure of R41.5 billion. The operational expenditure is funded as follows:

  • Revenue generated internally – R32.82 billion;
  • Operating grants – R5.9 billion; and
  • Capital grants – R2.78 billion.

Tariffs

The budget proposed an increase of 7.5 percent for assessment rates, consistent with the Consumer Price Index (CPI) of 5.2 percent plus 2.3 percent for real growth.

Electricity tariffs will only be increased by between 13.07 percent and 13.87 percent depending on the usage, whereas the National Electricity Regulator of South Africa (Nersa) has granted Eskom an increase of 15.63 percent in March 2019. This means the City will absorb, and not pass to consumers, the difference in percentage points between the two increases.

Water tariff will increase by 15 percent, which is equal to the increase pronounced by Rand Water.

Sanitation tariffs will increase by 11 percent, which is informed by the cost of sewer purification processes undertaken by the East Rand Water Treatment Company (ERWAT). The refuse removal tariff will increase by 7.5 percent for all users due to the main cost drivers of the service.

There have not been tariff increases for cemetery and crematoria over the past five years. Due to the need to maintain the cemeteries, a nominal tariff increase of 5.2 percent for residents, and 6.5 percent for non-residents was effected.

Social package

The City will shoulder the cost of R4 billion for the social package – an increase of R300 million compared to the previous financial year.

The complete package of indigent relief are as follows:

  • 100% rebate on assessment rates;
  • Free refuse removal;
  • First 100kWh of electricity per month is free. This is more than the provision made by national government policy and the City will bear the costs of the difference;
  • First 9kl of water and sewer per month is free;
  • Special rates on emergency services such as ambulance and fire-fighting; and
  • Free indigent burial.

The City continues to provide the first 6kl of water and sanitation for free to all households with a property value of R750 000 or less.

To date, the indigent database has 112 000 members, and the income threshold remains R5 090 or less per household

Human Settlements

MMC Xhakaza allocated R4.6 billion in the Medium-Term Revenue and Expenditure Framework (MTREF) and R1.6 billion for the 2019/20 financial year to the Department of Human Settlements.

Major projects in this regard include:

  • Leeuwpoort mega project – R380m for the MTREF and R165m for the 2019/20 financial year;
  • Chief Albert Luthuli mega project– R189.5m for the MTREF and R60.5m for the financial year;
  • Esselen Park – R234m for the MTREF and R107m for the 2019/20 financial year; and
  • Clayville – R57.5m for the MTREF and R30,5m for the 2019/20 financial year.

A further R101m has been set aside for the maintenance of hostels and rental stock.

Energy

A total of R2.29 billion has been set aside for the MTREF and R706m in the new financial year to cover the following:

  • Electrification of informal settlements – R732m for the MTREF and R202m for the next financial; and
  • Lighting programme of townships such as Thokoza, Tsakane, Tembisa, Etwatwa, Katlehong among others – R161m for the MTREF and R46.5m for the 2019/20 financial year.

Furthermore, R3 billion has been budgeted for the MTREF and R892m for the new financial year for the maintenance of the electricity infrastructure and the refurbishment of sub-stations in areas such as Germiston, Edenvale and Kempton Park.

Refurbishment of towns and townships

The work to improve and give a facelift to the decaying urban centres such as Germiston, Boksburg, Kempton Park and the Alberton Boulevard will continue to turn them into modern urban centres with a vibrant corporate look that can attract and boost investor confidence.

In this regard, an amount of R998m is set aside for the MTREF and R404m for the 2019/20 financial year. Key projects in this regard include:

  • Kempton Park CBD – R186m for the MTREF and R31m for the 2019/20 financial year; and
  • Germiston CBD – R613m for the MTREF and R188m for the financial year.

The allocation for regeneration of townships is as follows:

  • Tembisa – R124m for the MTREF and R75m for the new financial year;
  • Kathorus – R75m for the financial year; and
  • Wattville/Actonville - R110m for the financial year.

Metro police and Disaster and Emergency Services Management

The EMPD, Disaster and Emergency Services has been allocated 914m in the MTREF, and R275 million for the new financial year. The City will also build new fire stations in, among other areas, Katlehong, Reiger Park and Olifantsfontein.

An amount of R98m is budgeted for the recruitment of 266 additional metro police constables.

Cleaning

The City has budgeted R305m over the MTREF for waste removal, grass cutting, litter picking and tree felling.

Cost containment

MMC Xhakaza committed the City to radically alter the budget spent on catering without undermining the economic empowerment focus of this expenditure item.

Measures to recover costs incurred as a result of motorists who damage traffic signals, street lights and other municipal infrastructure will be strengthened.

He further committed that additional revenue sources will be used and all revenue leakages will be stopped.

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